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Page added on December 1, 2018

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Saudis Won’t Cut Oil Production On Their Own

Production

Saudi Arabia is going to do whatever it takes to stabilize the oil market, but it can’t and won’t do it alone without a collective decision from the OPEC and non-OPEC deal participants, Saudi Energy Minister Khalid al-Falih said on Wednesday.

“We are going to … do whatever is necessary, but only if we act together as a group of 25,” Reuters quoted al-Falih as telling reporters in Nigeria’s capital Abuja, referring to the 25 Saudi-led OPEC nations and Russia-led non-OPEC producers that have been tweaking oil production to stabilize the market for nearly two years.

Saudi Arabia and Russia steered the group in June to start pumping more oil to offset what was expected to be a steep drop-off of Iranian oil supply with the U.S. sanctions. But after the United States granted waivers to eight of Iran’s key oil buyers, oil prices began to slide, dragged down by fears of oversupply and of slowing global economy and oil demand growth.

Now the Saudis need higher oil prices than the current $60 Brent Crude, but Riyadh’s earlier idea of a sizeable decisive cut to be announced at the OPEC+ meeting next week could be trumped by President Trump’s recent comments about oil prices—“Thank you to Saudi Arabia, but let’s go lower!”—and his support for the Kingdom and its Crown Prince Mohammed bin Salman amid growing calls in the U.S. to punish the Saudis for the murder of Jamal Khashoggi.

“As Saudi Arabia we cannot do it alone, we will not do it alone,” al-Falih said on Wednesday, referring to a production cut, adding that “I think people know that leaving the market to its own devices with no clarity and no collective decision to balance the market is not helping.”

While Saudi Arabia is airing the idea of a new production cut, its key non-OPEC ally in the deal, Russia, is less convinced that it could take part in another reduction, or at least so it lets the market to believe.

Russia’s energy ministry is discussing potential oil production cuts with local producers and will continue talks to come up with a position by the OPEC/non-OPEC meeting in early December, Energy Minister Alexander Novak said last week. Another meeting with Russian oil companies was held on Tuesday, Reuters reported on Wednesday, citing two sources who knew that such a meeting was taking place.

By Tsvetana Paraskova for Oilprice.com



5 Comments on "Saudis Won’t Cut Oil Production On Their Own"

  1. Cloggie on Sat, 1st Dec 2018 9:15 am 

    “Saudis Won’t Cut Oil Production On Their Own”

    They know peakoil demand is coming. Sell your sludge now, while somebody still wants it, regardless of the price you can get.

    In a couple of years demand will collapse because of climate change, renewables or both.

  2. JuanP on Sat, 1st Dec 2018 9:30 am 

    The Russians may agree to stop their oil production growth temporarily or make a symbolic cut, but today’s prices are good enough for Russia, and I think they’d rather do nothing. Russia’s budget balances out with oil at $40.

    The Saudis, on the other hand, need higher average prices in the long run, but MBS may be willing to lose some income to gain favor because of the Khasssogi incident.

  3. Davy on Sat, 1st Dec 2018 9:49 am 

    “Russia’s budget balances out with oil at $40.”

    That’s pretty simpleton. Do you have references? I say references because this is a complicated topic. What is the budget? What is the broad based budget price for a healthy economy? You are just a russophile trumpeting the same shit weekly. Irrelevance is your middle name.

  4. Sissyfuss on Sat, 1st Dec 2018 9:54 am 

    Survival trumps morality, an essential quality of human nature. Khashoggi died for our sins but a few Hail Marys and we’re good to go.

  5. joe on Sat, 1st Dec 2018 10:13 am 

    “https://themoscowtimes.com/articles/russia-inc-goes-into-profit-as-the-budget-breakeven-price-for-oil-falls-to-53-60302”

    It’s more like 53. But my guess is they can squeeze more blood out of that stone. Russia is not an oilistan, its a gasistan, and is building a gas pipline to Merkel that will ensure that Ukraine can go f-@k itself. Just as Gerhart Schroder built nord stream 1, so Merkels nord stream 2 will complete a project that ensures Germanies energy future without fighting a war. By tying in Russia Germany is doing to Russia what it did to France. There is nothing the UK can do about it except complain to the USA and beg Trump to say somthing.

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